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This chapter addresses the contribution made to the strategy literature and leadership literature in general. Furthermore, the limitations of this study are outlined and future research recommendations are given.

5.1. MAIN FINDINGS

The main research goal of this study was to create a clear understanding of the relationship between different styles of leadership and the effectiveness of strategy. The research question is: ‘’ What effect does the style of leadership have on the effectiveness of strategy generation and execution process at Dutch SMEs?’’ This question was answered by a quantitative methodology conducting a online mail questionnaire.

The first sub-question analysed the characteristics of an effective strategic generation and execution process. The focus of strategy generation is the planning for the long-term survival of organizations. In order to create sustainable advantage processes, actions and routines within an organization has to be clear. The characteristics of the strategy generation process consist of an organization’s mission, goals, objectives and selecting an appropriate strategy. On the other hand, the focus of strategy execution is on positioning and managing organizational and environmental forces during the strategic roll-out in order to ensure operational efficiency. An effective strategy execution process is widely identified as the outcome of the cooperation and coordination produced by consensus between leaders and subordinates. A challenge of an effective strategy execution process is to apply a suitable leadership style which contributes to competitive advantage of a company. Measuring progress in the strategy execution phase turns out to be very important because it gives insights in the actual performance versus goals. The right people, processes, information and technology capabilities are important aspects for the success of both strategy generation and execution.

The second sub-question analysed the characteristics of leadership. In this study, leadership is seen as a dynamic energetic process which provides direction, guidance and influence subordinates. Leadership is all about influencing a group of other people in order to achieve organizational outcomes. The effectiveness of leadership in influencing and directing others is seen in improved outputs. After a literature review, all the different leadership theories developed over the past years were analysed. The path-goal theory of House (1974) is chosen as most appropriate measurement instrument for this study. The path-goal theory identified four leadership styles: directive, supportive, participative and achievement-oriented. In this study, each respondents has a dominant style of leadership which are 38 directive, 53 supportive, 66 participative and 9 achievement-oriented leaders. Whereof, 24 directive, 28 supportive, 35 participative and 6 achievement oriented leaders are currently working at a Dutch SME.

The last sub-question analysed leaders with different leadership styles regarding the effectiveness of strategy generation and execution. Figure 10 shows the effectiveness of both strategy generation and strategy execution at Dutch SMEs. The SMEs contribute in providing job opportunities and act as supplier of goods and services to larger organizations. SMEs have simple systems and procedures, which also allows flexibility, immediate feedback, short

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decision-making chain, better understanding and

quicker response to

customer needs than larger organizations. In total 93 leaders of SMEs completed the questionnaire. Based on figure 10 it can be concluded that only 5,4% of the SME leaders are very effective at both strategy generation and execution. However, 46,2 % of the SME leaders rated

themselves as effective at both strategy generation and execution.

A multiple regression is performed to investigate whether each specific style of leadership has a significant impact on the effectiveness of both strategy generation and effectiveness. The directive leadership style shows a negative coefficient (-.005) on the effectiveness of strategy generation and a negative coefficient (-.019) on the effectiveness of strategy execution. Based on the literature a negative relationship was assumed regarding strategy execution. Contrary, the directive leadership style has both for the effectiveness of strategy generation and the effectiveness of strategy execution the only negative coefficients compared to the other three leadership styles. However both effects not significant (P>0,05), meaning that the data prove the treatment had no effect. Regarding a supportive leadership style, a negative effect was assumed on the effectiveness of strategy generation. Supportive leaders are well known as ‘human concerned’. However, the data show that both the coefficients regarding the effectiveness of strategy generation (.011) and strategy execution (.009) are positive related to a supportive leadership style. However, both coefficients are not significant (P>0,05), meaning that the data prove the treatment had no significant effect. The biggest group within the sample are the participative leaders (N=35). The participative leadership style shows a positive coefficient (.005) on the effectiveness of strategy generation and a positive coefficient (.028) on the effectiveness o strategy execution. However, both coefficients are not significant (P>0,05), meaning the data prove the treatment had no effect. Lastly, the achievement-oriented leadership style refers to the highest positive coefficients. The achievement-oriented leadership style shows a positive coefficient (.030) on the effectiveness of strategy generation and a positive coefficient (.036) on the effectiveness o strategy execution. However, both coefficients are not significant (P>0,05), meaning the data prove the treatment had no significant effect. Concluding, there are positive and negative coefficients observed regarding the four different leadership styles and effectiveness of strategy generation and execution. Although, the data are not significant which means that the data prove the leadership style had no significant effect on the effectiveness of both strategy generation and execution.

Figure 10: SMEs effectiveness strategy generation versus strategy execution (N=93)

49 5.2. THEORECTICAL AND PRACTICAL IMPLICATIONS

This study has a number of implications which are either derived from a review of the literature of from the findings of the empirical study. The objective of this research was to investigate the perceived role of leadership regarding the strategy generation and execution processes at Dutch small and medium sized enterprises (SME). Secondary objectives are to gain an understanding of the nature and challenges of both strategic leadership and the strategy generation and execution process. Results show that none of the four leadership styles has a significant influence on the effectiveness of both strategy generation and execution. However, the coefficients indicate a negative relationship between a directive leader and the effectiveness of the strategy process. Directive leaders were seen as aggressive, controlling and structured. The other three leadership styles indicate a weak positive relationship with the effectiveness of strategy generation and execution.

Secondly, the effectiveness diagram with the two axes (strategy generation and strategy execution) indicates that only 5,4% of the leaders working at a Dutch SMEs rated themselves as ‘very effective’. Those insights could increase the general awareness of leaders at Dutch SMEs and they should aim to be ‘very effective’ at both strategy aspects. Furthermore, it provides consultancy firms the opportunity to respond to this ‘gap’. The difference between ‘very effective’ and ‘effective’ lies in the fact that effective strategy generation will need fine-tuning before sustainable success can be achieved. On the other hand ‘very effective’ strategy generation do not need the fine-tuning; very effective strategy generation means adding value in a way the competitors can’t which will lead to long-term success. Regarding strategy execution the difference between ‘very effective’ and ‘effective’ lies in the fact that ‘very effective’ strategy execution make sure that everything the company does is in line with the strategy and ‘effective’ strategy execution make sure that most of what the company does is in line with the strategy.

5.3. LIMITATIONS AND FURTHER RESEARCH

During this research process, different choices have been made in order to conduct this study. Unfortunately, these choices impose limitations because they exclude unexplored opportunities. This section discusses limitations of each minor choice that was made within this research. These limitations concern both the use of the literature and the use of empirical material. However, these limitations could be a great starting point for further research.

While, the objective was to conduct a thorough cross-disciplinary literature review it is possible that applicable literature is excluded. The first part of the literature review focuses on strategy aspects and the second part focuses on leadership aspects. Although the focus of various similar studies is different, similar characteristics of leadership and strategy appeared across all of them. Therefore, it is believed that the possible excluded literature is not problematic for this study.

As well, the data collection method for the exploratory study has faced limitations. A first limitation relates to the appropriateness of the development. In this study, the path-goal leadership questionnaire of Indvik (1985;1988) is used. The overall Cronbach’s alpha for the leadership part has a value of 0.704 which is satisfactory. However, the individual scores are a bit lower which indicates a weak internal consistency. The main reason for choosing this

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instrument is the fact that it limits the length of the questionnaire because of the time respondents were willing to spend on it. The path-goal questionnaire of Indvik (1985;1988) contains of 20-items which are clear and to the point. Furthermore, meta-analysis of other researchers indicates acceptable internal consistencies. However, for further research it is recommended to use another leadership questionnaire instrument or use a 5- point Likert Scale instead of a 7 point Likert Scale. Some researchers suggest that a 5-point Likert Scale had better data quality in terms of missing data, end effects at the item and scale level, as well as higher levels of internal consistency. Another limitation relates to the development of the questionnaire regarding the strategy part. Since, there was no existing instrument found that measures the effectiveness of the strategy generation and execution process. Pre-testing procedures are used and the reliability and validity tests are convincing enough. Furthermore, the measuring of the constructs could be more operationalized and optimized. For instance, including a question about the function of the respondent (CEO, CFO or team leader) and the years of experience. These two variables give more specific background information of the respondents which could positively contribute to the outcomes of the research.

Furthermore, the data collection of this exploratory research was not without limitations. A limitation is the generalizability of the study. In particular, the selection of sample from one database formed a potential source of bias. In this study mainly the leaders of the customer database of IJsselvliet Consultancy are included in the research. However, these leaders are currently working at different kind of industries – e.g. banking, insurance, healthcare, education, construction, automotive, industry, transport, logistics and public sector. Furthermore, an article with the link to the questionnaire is published at LinkedIn and some people in personal network participate in the study. However, the results are not directly generalizable to a greater population. For future research it is recommended to include more than one database which could decrease possible sample bias. Also the self-selection of respondents within firms might have introduced bias, for example, by only reaching the leaders of the firm. In accordance, the sample size is an important factor larger samples are more likely to minimize bias than smaller samples. The sample of this study consists of leaders who are currently in a current managerial position. In total 166 leaders completed the questionnaire whereof 93 leaders currently working at a Dutch SME. However, the output of the multiple regression is not significant. For future research it is recommended to include more leaders in order to get significant results.

Another limitation is especially related to the research design choice. A single-method research is conducted which limited data based on other views. The data was collected at one period of time. Results of this study show therefore only the perception of the leader at that particular moment. However, results could differ in periods of time, because certain developments and changes in private or work environments may not be incorporated. Furthermore, a questionnaire is always a self-reporting based assessment. The structure of the questions affects whether the reported information accurately measures the construct under consideration. For example, respondents often respond in such a way that presents them in a more favorable light, even if these responses do not reflect how they actually behave or think. Although the respondents have most knowledge about the measured constructs. For future research it is recommended to examine also the other side of the coin. For instance, through case studies or a questionnaire based views of subordinates instead of business leaders.

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The findings and implications open several areas for future research that logically arise from the findings and limitations of this study. First of all, future research could shed more light on issues raised in this study. There are opportunities to go more in-depth into certain themes or topics that surfaced during this research, for instance the role of employees commitment in the effectiveness of strategy generation and execution. Due to the fact of globalization and a more knowledge intensive economy, it is interesting to investigate the effect of innovation on the effectiveness of strategy generation and execution. In order to improve the generalizability of the research, an opportunity would be to conduct comparable research using more than one customer database. Other interesting research opportunities include further exploration of the interaction between strategy generation and strategy execution. Because of the fact that some researchers argued that strategy generation and execution are not two distinct sets of activities which occur in a specific sequence.

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